PRICED OUT: Americans flock the Midwest to find financial relief

Key Concepts

• Midwest Migration: Increasing movement of people to the Midwestern United States due to affordability and economic opportunities.
• Remote Work Impact: The rise of remote work enabling geographic flexibility and driving migration patterns.
• Job Growth vs. Wage Growth: The importance of job creation alongside wage increases for sustainable affordability.
• Entrepreneurship in Smaller Cities: The role of entrepreneurs in fostering economic growth in Midwestern cities.
• Capital & Labor Mobility: The concept of free flow of capital and labor as a strength of the US economy.
• "Don't California My..." Sentiment: Resistance to importing policies and lifestyles from high-cost states.

The Midwest as an Emerging Economic & Lifestyle Destination

The discussion centers on a growing trend of Americans, particularly Millennials and those forming families, relocating to the Midwest. This shift is driven by a combination of factors, primarily the significantly lower cost of living – specifically housing – compared to coastal cities and the national average. Median home prices in the Midwest are notably lower, offering affordability that is increasingly difficult to find elsewhere.

Cost of Living & Wage Growth Dynamics

The core argument presented is that the Midwest offers a compelling value proposition: bigger paychecks coupled with lower expenses. Taylor highlights how remote work, accelerated by COVID-19, has made this geographically feasible, allowing individuals to maintain their income while benefiting from a lower cost of living. This is exemplified by people choosing locations like Salt Lake City, where they can afford to build a life and a home. However, David cautions that wage growth alone isn’t sufficient; it must be accompanied by job growth. He points out that while wages are increasing, the smaller cities in the Midwest are not experiencing the same level of job creation as larger cities like Nashville, Phoenix, Dallas, and Austin. This imbalance could lead to rising housing prices if job opportunities don’t keep pace. Data points to cities like Boise, Idaho, and Phoenix, Arizona, as examples where housing is not cheap despite initial perceptions.

The Shifting Demographics & Political Leanings

The conversation touches upon the demographics of those moving to these areas. Dagen notes that it’s primarily moderates and conservatives, rather than those fleeing liberal politics, who are driving the migration to cities like Nashville and Dallas. His company’s expansion into cities like Grand Rapids, Michigan, reflects this broader trend of economic growth in the middle of the country. He contrasts this with the experience in cities controlled by liberal policies, citing concerns about safety and rising crime rates.

Entrepreneurial Spirit & Economic Diversification

Brian raises an important counterpoint, suggesting that smaller Midwestern cities like Sioux Falls, South Dakota, and Des Moines, Iowa, are attracting a different type of individual – entrepreneurs. These individuals aren’t seeking jobs; they’re creating them, fostering new centers of economic growth. Lou agrees, emphasizing the importance of “pioneers” who attract capital and establish businesses. He recounts his own experience moving to Milwaukee, Wisconsin, 25 years ago, highlighting the importance of considering the full picture beyond initial impressions.

The Importance of Capital & Labor Mobility

A key perspective presented is the importance of capital and labor mobility as a defining characteristic of a free country. The ability of capital to flow to locations where it’s “treated better” is seen as a strength of the US economy. This is contrasted with China, where restrictions on capital and people flow are seen as a disadvantage. This idea is supported by the observation that companies like Oracle are relocating headquarters (from Austin to Nashville) in search of more favorable conditions.

Real-World Examples & Company Movements

Several real-world examples are used to illustrate the trend:

• Oracle’s relocation: Moving its headquarters from Austin, Texas, to Nashville, Tennessee, despite having recently moved to Austin.
• Company expansions: Dagen’s company opening offices in Nashville, Phoenix, Dallas, Austin, and Grand Rapids, Michigan.
• Salt Lake City: Cited as a popular destination for remote workers seeking affordability.
• Ohio (Dagen’s location): Presented as an example of a city with affordable real estate but limited job opportunities.

The "Don't California My..." Phenomenon

Taylor introduces the concept of the “Don’t California my Texas” sentiment, reflecting a resistance to importing policies and lifestyles from high-cost states. This highlights a desire to preserve the unique character and affordability of these emerging destinations.

A Note on Regional Diversity

The discussion acknowledges the diversity within the Midwest itself, recognizing that locations like North and South Dakota differ significantly from Illinois and Minnesota. David humorously points out that many New Yorkers view anything west of the Hudson River as the Midwest.

Cultural Note: Hot Dish

Brian concludes with a lighthearted cultural reference to “hot dish,” a Midwestern casserole, as a unique aspect of the region’s identity. He defines it as a dish made in a pan or crock pot with numerous ingredients, comparing it to a tuna fish casserole or a tater tot hot dish.

Conclusion:

The conversation paints a picture of the Midwest as an increasingly attractive destination for those seeking affordability, economic opportunity, and a different lifestyle. While challenges remain, particularly regarding job growth in smaller cities, the combination of lower costs, rising wages, and the flexibility afforded by remote work is driving a significant shift in population and economic activity. The free flow of capital and labor, coupled with an entrepreneurial spirit, are key factors contributing to this trend, positioning the Midwest as a potentially significant force in the future of the American economy.